The lull in demand may only be temporary, with comments received during last week suggesting September could see at least a mini-surge in buying interest as parties start to return to their desks.

European base oil prices are called softer moving forward into Q4, with demand ultimately reliant on major economies returning to positive growth, which has to date been elusive in countries such as Germany, France and the United Kingdom. The Trump tariffs have been announced, but the full effects of the levies imposed are yet to be assessed while analysts work calculate behind the scenes.

Among industries most affected will be German and French automobile manufacturering, where prices for luxury models will have to be increased to U.S. importers and dealerships. Outcomes in the U.S. have yet to be determine; some predict lower sales, whilst other more pragmatic views are that the application of these tariffs will start to fuel inflation in the U.S.

The measured effects on European base oils and lubricant sales have yet to be calculated, but there will be some negative impact.

African and Middle Eastern demand appears to be healthier, with a number of buyers scouting potential markets for supplies of base oils for September and October. Demand is spread across all types of base oils, although premium grades are being sought more often than previously seen.

West Africa still relies on Group I, and there is little momentum for upgrading now. The emphasis, as usual, is on price rather than quality and specification, and with no end to this scenario in sight, Group I will continue to prove the stalwart base oil being used in West African markets.

Middle East regions are currently slower, with less activity being reported in terms of cargoes arriving into the Middle East Gulf and surrounding areas from U.S. and Red Sea sources. With recent record high temperatures in the region, many operations are working on shorter hours, limiting demand for base oils and additives. This situation will possibly continue until September.

Crude and Gasoil Prices

Dated deliveries of Brent crude: $66.50 per barrel, October front month settlement.
West Texas Intermediate: $63.85/bbl, September front month.
European low-sulfur gasoil: $672 per metric ton, August front month.
Source: London ICE late Aug. 11.

Europe

Group I demand around Europe has vanished, with many contacts unavailable for comment this week. Those still around described the market as very quiet; just a few were looking to purchase, and they said it was difficult to pin sellers for offers and dates. Most are resigned to the current lull in the market, although many had planned August in advance and do not need to buy additional quantities.

A couple of large blenders have closed down operations and are using the holiday period to perform routine maintenance to machinery and plant, bringing in specialist engineers and mechanics to service filling lines and storage tanks.

Prices for Group I oils are unchanged from last week, although producers with  growing stocks may be tempted to offer discounts. Sellers are mainly looking to September for business to resume, with current Group I prices remaining at significant differential to Group II grades, thereby encouraging demand.

Group I Prices, Rotterdam, FCA basis
SN150: $980, unchanged

SN500: $1,010/t, unchanged
Bright stock: $1,475/t-$1,500/t, unchanged

Pan-European, FOB basis
SN150: €800/t-€825/t, unchanged
SN500/600: €860/t-€900/t, unchanged
Bright stock: €1,275/t-€1,320/t, unchanged

The euro’s exchange rate strengthened to $1.16077.

Last week’s mini-spike in Group II demand fizzled out and perhaps stemmed from a few blenders seeking to tide over production during August. Purchasing has declined again and is not expected to pick back up until September.

Prices had become more competitive following recent adjustments, but buyers who are around seem relaxed that values will not vault in the short term and therefore willing to wait until September to purchase.

Group II prices, FCA basis
110N/150N: €950/t-€995/t, unchanged
220N: €1,015/t-€1,045/t, unchanged
600N: €1,120/t-€1,150/t, unchanged

These values apply to a wide range of Group II base oils from Europe, the U.S., the Red Sea and Asia-Pacific. For imports the ranges refer to bulk shipments, though smaller quantities are also transported in flexi-tanks.

Group III prices could have been expected to rise on the back of replenishment cargoes coming into Antwerp-Rotterdam-Amsterdam from Asia and the Middle East Gulf, but most of the incoming barrels had ben pressed to regular customers who have been patiently awaiting delayed deliveries.

Four centiStoke remains in demand but is limited in availability. All available quantities have been allocated. Arriving cargoes include a large parcel of gas-to-liquids Group III+ from Qatar, which will mostly be used by supplier Shell.

Shipments from South Korea and Malaysia will arrive during August, although the South Korean parcel is reportedly delayed.

Prices for Group III oils with partial slates of approvals, FCA Antwerp-Rotterdam-Amsterdam, Northwestern Europe
4 and 6 cSt: €1,085/t-€1,120/t, up €25 on the high end
8 cSt: €1,125/t-€1,140/t, up €25-€15

Fully approved, FCA Antwerp-Rotterdam-Amsterdam, Northwestern Europe, Spain
4 and 6 cSt: €1,695/t-€1,725/t, unchanged
8 cst: €1,745/t-€1,760/t, unchanged

A transportation premium may be charted for product sold on a delivered basis.

Rerefined Group III, FCA Germany
4 and 6 cSt: $1,035/t-$1,075/t, unchanged

Baltic Sea

Group I and Group II parcels from Northern European sources are being delivered to lube blenders in Baltic states.

The European Union has begun monitoring to identify imported finished lubricants made with Russian base oils, now prohibited. To your columnist’s knowledge, no cases have come to light.

Because of price advantages, Russian base oils are still being used in various locations throughout Eastern Europe, where trucks are able to reach rogue blenders that allegedly blend the Russian stocks with those from other European sources.

Researching Baltic prices for Russian Group I exports remains impossible, but ballpark Baltic FOB rates can be estimated using CIF or CFR prices disclosed when Russian cargoes are discharged in markets such as Turkey or Nigeria.

Notional prices for Russian exports, FOB St. Petersburg
SN150: $750/t-$775/t, unchanged
SN500: $780/t-$795/t, unchanged

Black Sea & Turkey

Lube blenders in Turkey are still trying to access U.S. Group I barrels through a Swiss trader. From other sources this report is informed that the trader has drawn a blank on being able to negotiate a parcel that would work on price and shipping economics into Gebze, Turkey. Smaller quantities could be bought from a number of European suppliers to be transported in flexies, but this would not satisfy the quantity, conditions and prices being sought by Turkish buyers.

Russian base oils are again being imported into Turkey after a spell when quantities were unavailable or were being diverted to other markets. Quantities are also being delivered from Sea of Azov ports into terminal in Limas, Turkey. The Turkish market is slow, with many players missing from their desks.

Turkey prices

Russian Group I from Rosneft and Bashneft, CIF/CFR Gebze
SN150: around $910/t, unchanged
SN500: around $925/t, unchanged

Tupras Group I, ex rack Izmir refinery
Spindle oil: Tl 35,447/t plus Tl 8,986.84/t duty, unchanged
SN150: Tl 30,261/t plus Tl 97,949.64/t duty, unchanged
SN500: Tl 34,204/t plus Tl 8,738.24/t duty, unchanged
Bright stock: Tl 52,506/t plus Tl 12,398.64/t duty, unchanged

Spindle oil and SN150 prices valid from July 31, SN500 and bright stock prices from July 10. Sales also incur a standard loading charge of Tl 9,487.20/t.

Offers for Group II on an ex-works basis have not been heard this week due to a lack of contact from suppliers. The prices below remain valid.

Group II, ex-works Turkish trader
110N and 220N, Russian origin: $1,100/t, unchanged
350N, blended or from another source: $1,275/t, unchanged
150N, from Taiwan or Saudi Arabia: $1,275/t, unchanged
500N/600N, from Taiwan or Saudi Arabia: $1,595/t

Partly approved Group III
4 cSt from Tatneft, FCA: €1,295/t, unchanged
4 and 6 cSt, other sources, perhaps unavailable: €1,375/t-€1,400/t, unchanged

Fully-approved Group III from Spain, CIF Gemlik
€1,825/t-€1,855/t, unchanged

Middle East

Supplies from Yanbu and Jeddah, Saudi Arabia, have dropped in quantity, perhaps due to Indian buyers taking large quantities of Group I and Group II base oils from U.S. sources during June and July, toppling off inventories that may not need to be replaced for another couple of months. Similarly, receivers in the United Arab Emirates have also declared that they do not require large quantities of base oils from Yanbu during August but will recommence taking contracted quantities in September.

Luberef, supplemented by sister company S-Oil, has been trying to place cargoes of Group I and II into European markets. A couple of cargoes of Group I were completed earlier in the year and were successfully resold ex tank, but this was handled through a distributor in Antwerp-Rotterdam-Amsterdam.

U.A.E. buyers appear to be taking a break from Saudi Arabian supplies, with lower numbers of cargoes being organized for August.

Iran has completely stopped loading Group I cargoes from southern and western ports such as Bandar Abbas and Bandar-e Emam Khomeyni, but relatively large quantities of rubber process oils are still being exported. This material goes into Ras al Khaimah, UAE, and is then bridged to Haldia, India, or Ulsan, South Korea.

Iranian Group I prices from June were at around $965/t for premium SN500 and $945/t for SN150. These prices are given as FOB indications only and will no longer be valid.

Group I cargoes are imported to the UAE from the U.S. and Europe, purchased from traders in those locations, some of whom have representation in the UAE.

Group II base oils are being imported into the UAE from the Red Sea, the U.S., South Korea, Europe and Singapore, though Luberef in Yanbu controls a significant percentage of this trade. Grades are resold ex tank in the UAE, or on a truck-delivered basis throughout the UAE and parts of Oman from various distributors who purchase the base oils directly from Luberef and also from U.S. and European traders.

Group III supplies are again available in the UAE from both Adnoc’s plant in Al Ruwais, UAE, and Bapco’s plant in Sitra, Bahrain. Buyers tend to remain with one sourced supplies, even, for example, when Bapco’s output was constrained by operational issues.

Group I, CIF/CFR UAE ports
SN150: $925/t-$945/t, down $15-$20
SN500: $985/t-$1,020/t, up $10-$25
Bright stock: $1,345/t-$1,370/t, down $5 at the high end

Group II, FCA or on an RTW basis UAE and Oman
110N, 150N and 220N: $1,425/t-$1,475/t, unchanged
600N: $1,510/t-$1,555/t, unchanged

Group III, FCA Hamriyah or RTW in the UAE and Oman
4 cSt: $1,385/t, unchanged
6 cSt: $1,400/t, up $5
8 cSt: $1,420/t, unchanged

The highs of the Group II ranges refer to RTW deliveries Sales are in U.S. dollars or UAE dirhams, which are pegged to the dollar at AED 3.67.

Group III prices include a reseller margin of around $75/t to cover storage, handling and operating margin. RTW deliveries incur a charge of $20/t-$55/t.

Group III cargoes are also loading from Al Ruwais and Sitra for shipment to the U.S., Europe, India and China, sometimes also to Thailand. Estimated netbacks, which may reflect FOB prices for distributors, are unchanged this week at $1,270/t-$1,300/t for 4, 6 and 8 cSt.

Netbacks for GTL Group III+ loading ex Ras Laffan, Qatar, are estimated at $1,255/t-$1,290/t. These are given as indications only, since there are no distributors involved in this trade and the supplier does not disclose information regarding the cargoes other than what is picked up from shipping reports from brokers.

FOB netbacks are calculated using distributor selling prices in known markets minus estimated marketing costs, margins, handling, storage and freight.

Africa

A Spanish supplier has loaded a quantity of Group I base oils for delivery into Mohammedia, Morocco. Morocco has become dependent on purchasing base oils and other petroleum products, since the Samir refinery was sold to private equity firm Coral Morocco Holdings, a Swedish registered company owned by a Saudi billionaire Al-Amoudi. This occurred in 1997, following the economic problems in Morocco, when the government had to sell assets to pay employees.

The ownership of the lubricant blending plant is hazy, but suffice to say that the operator is able to function and open letters of credit to purchase quantities of Group I base oils when required.

The large base oil cargo destined for Durban appears to be loading during August from Rotterdam and Fawley, U.K. It will total around 19,000 tons and may include Group l, Group II and Group III along with a small parcel of easy chemicals, possibly polyalphaolefin.

West Africa remains subdued. There is a report of a cargo that will load out of Fawley and discharge into three ports, Conakry, Guinea, Abidjan, Cote d’Ivoire, and Tema, Ghana, but the order is not known.

In Nigeria, base oil prices ex tank are being discounted to move material out of tank. The rainy season is affecting trade and business, causing internal transportation problems for base oils moving around the country, but this is normal for this time of year, so the rains are factored into operations around this time.

Nigerian buyers are looking for cargoes from sources in the U.S. and for Russian imported from the Baltic or by transhipments through Egypt or Turkey. Receivers in Lagos are looking for values below those for Russian oils delivered months ago but are repeatedly told that such expectations are unrealistic. Russian FOB numbers were lower then, freight rates were less, and sellers were willing to grant exceptional terms like 150 days credit from date of bill of lading.

Europe does not have the product available for a Nigerian cargo, besides which prices on the continent are relatively high. Meanwhile, FOB numbers in the U.S. have risen since May and June, and while sufficient quantities may be available, bright stock prices have risen to make SN900 much more expensive to blend. Some reseller receivers are saying they will only accept SN150 and SN500.

The Nigerian naira’s black market exchange rate is NGN 1,540 to the U.S. dollar.

Nigerian Group I prices, CFR Apapa

U.S. base oils
SN150: $890/t-$910/t, unchanged
SN500: $920/t-$940/t, unchanged
SN900: $1,040/t-$1,070/t, unchanged

Russian base oils
SN150: $885/t, unchanged
SN500: $929/t, unchanged
SN900: $995/t, unchanged

Ray Masson is director of Pumacrown Ltd., a trader and broker of petroleum products in London, U.K. Contact him directly at pumacrown@email.com.

Lubes’n’Greases shall not be liable for commercial decisions based on the contents of this report.

Archived base oil price reports can be found through this link: https://www.lubesngreases.com/category/base-stocks/other/base-oil-pricing-report/

Historic and current base oil pricing data are available for purchase in Excel format.